Fed’s Rate Cut Outlook and Crypto Surge: What’s Next?

With the holiday season in full swing, the crypto world is buzzing in anticipation. The U.S. Bureau of Economic Analysis is gearing up to release the November Personal Consumption Expenditures (PCE) inflation data, and both crypto enthusiasts and investors are closely watching.

Read on to know more.

Focusing on the PCE Inflation Data

The digital currency market is at a key point. Experts predict the annual PCE inflation rate may drop slightly to 2.8% from the previous month’s 3%. At the same time, there is keen interest in the monthly rate, which is expected to remain stable.

Rate cut outlook

The Core PCE is seen as the Federal Reserve’s main inflation indicator. Analysts expect a modest 0.2% increase in its monthly rate. However, the annual rate is projected to fall to 3.3%, the lowest since 2021.

Recent statements from Fed Chair Jerome Powell align with market expectations. There’s growing talk of three possible rate cuts in 2024. According to CME FedWatch, there’s a 45% chance of rate cuts starting in March, and a 71% chance of a 25 bps rate reduction.

Santa Claus Rally Incoming?

Amid this economic backdrop, major cryptocurrencies like Bitcoin, Ethereum, Solana (SOL), BNB, XRP, Cardano (ADA), and Avalanche (AVAX) are showing upward trends. The market is hopeful, reminiscent of the traditional Santa Claus rally, a term used when stocks tend to rise in December.

Bitcoin, the leading cryptocurrency, has seen a 1% increase in the last 24 hours, reaching around $43,780. However, an 18% drop in trading volume suggests caution among traders.

Crypto Options Expiry – Coming Up!

As the week comes to a close, attention is turning to the expiration of crypto options on Friday. A significant number of BTC and ETH options are set to expire, with values totaling $1.11 billion and $490 million, respectively. The market is prepared for potential profit adjustments and associated price movements.